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The evolution of snackers: changing consumer attitudes mean noshing isn't what it used to be. Suppliers are responding with bold new flavors and a serious regard for health-conscious nibblers.

Thanks to a continued emphasis on good-for-you snacks and the introduction of bold new flavors for traditional favorites, the snack aisle may again be the hub of activity that supermarket operators had come to know and love. Shifting consumer tastes have left sales somewhat flat to declining across a number of formerly strong segments in the snack category. While there are several reasons, two stand out most: the nation's obsession with minimizing carbs and its newer attention on lowering trans fats in the diet.

Many companies quickly responded to these consumer trends and adjusted their offerings accordingly. The influence over the last year of the low-carb craze, which many observers say is quickly fading away, is clearly demonstrated by the types of snacks that have seen double-digit sales gains. According to Chicago-based Information Resources, Inc., sales of snack nuts through the food, drug and mass channels (excluding Wal-Mart) jumped 15.5% in the 52 weeks ended Oct. 31, while caroband yogurt-covered snacks were up 14.6%, dried meat snacks increased 14.5% and pork rinds rose 13.7%.

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Natural snacks experienced a banner year as well, according to Michelle Peterman, vice president of marketing for Kettle Foods in Salem, Ore. As of the third quarter, she says, natural potato chips had achieved 22% growth. Traditional potato chip sales grew 1% through food, drug and mass (excluding Wal-Mart) in the 52 weeks to Oct. 31, according to IRI, and less than that in supermarkets. "What we see from this is that consumers are voting with their dollars and letting companies know better-for-you snacks are important to them and their lifestyle," Peterman says. She expects this level of interest to continue into 2005 and beyond.

Health, flavor and value appear to be three of the top factors attracting consumers to the nut category. According to James Barker, senior vice president of sales and marketing for John Sanfilippo & Son, based in Elk Grove Village, Ill., maker of Fisher Nuts, the snack nut category continues to experience explosive growth. Sales of nuts increased by almost 20% in 2003, and as of this past fall the segment was still recording double-digit growth.

Trade groups are also seeing the impact better-for-you products are having on the snack category. "Snacks are an important part of most consumers' busy lifestyles, and can play a key role in their diets when the proper balance between overall caloric intake and physical activity is maintained," says Jim McCarthy, president and CEO of the Snack Food Association, based in Alexandria, Va. "Savory snack sales will grow at a steady pace, with individual categories continuing to reflect the dietary trends of consumers."

Consumer research from other groups supports the bright outlook. According to Mintel, a research firm based in New York City, nine out of 10 Americans eat salty snacks, and many of them eat snacks as a meal replacement or between meals. As might be expected, the overwhelming majority (93%) of households with children buy salty snacks, and a huge proportion of households without kids under the age of 18 (87%) purchase snacks as well.

Officials at Mintel say this might explain why more snack companies are extending the range of products that appeal to adults through the addition of gourmet snacks and spicier taste options. Take some of the new flavor options of Pringles, for example. In recent months, Procter & Gamble has added some spice to its popular snack chip line through the introduction of such bold flavors as Fiery Hot, Pizzalicious, Spicy Cajun, Salt & Vinegar and Ranch.

Industry research reveals another interesting fact: Salty snacks account for slightly more than half of total snack sales. That's good news for supermarkets, which dominate market share in almost every snack segment. In addition to low-carb snacks and those with low trans fats or none at all, other drivers of category sales include low-salt and no-salt snacks, fat-free snacks and alternatives such as soy nuts. With baby boomers influencing many of these developments, experts say they expect to see a record number of new product introductions in 2005 focusing on health as well as on flavor and taste.

Across the board, Frito-Lay, a division of PepsiCo, has been changing many of its popular snacks to better conform to what consumers are looking for. Sun Chips, Frito-Lay's line of multigrain snacks, will include a heart-healthy message on the front of its new packaging. The packaging will include the FDA-approved health claim, "Dicts rich in whole grain foods and other plant foods, and low in saturated fat and cholesterol, may help reduce the risk of heart disease."

Why the change? "People are looking for different ways to manage their diets," says Frito-Lay spokesman Jared Dougherty. "The new Sun Chips packaging will help consumers more easily identify whole grain snacks that can be included in a healthy diet." Sun Chips are not the only healthy snack in the Frito-Lay lineup. Earlier this year, the company introduced Rold Gold Heartzels--heart-in-heart-shaped pretzels and the first pretzel to meet the American Heart Check Mark guidelines as a heart-healthy food.

Frito-Lay is also promoting the fact that some of its snacks have no trans fats. As part of the brand's new look, the Tostitos line of tortilla chips will be the first Frito-Lay product to carry the message on the front of the package. The company plans to put the same message on other snacks, including Lay's, Ruffles, Doritos, Fritos and Cheetos. "Consumers today are becoming increasingly aware of foods containing trans fats," said chief marketing officer Stephen Quinn in a company statement. "Our goal in doing this is to help consumers make informed snacking choices."

To further ensure customers are aware of these changes, Frito-Lay's parent, PepsiCo, developed its Smart Spot program, which makes it easier for consumers to identify better-for-you and good-for-you products.

Barker says the new Fisher Nature's Nut Mix, which combines fruits and nuts, was introduced for consumers who want a healthy-for-you, great-tasting snack to feel good about. Marketed as an upscale snack, the product is targeted to health-conscious consumers, and the company suggests retailers display it where consumers will be looking for something healthy to eat, like the produce, nutritional or natural foods departments.

Low-carb has helped boost sales and interest in nuts, but Barker says nut sales had been growing before this trend. "Nuts lend themselves well to all meal plans and healthy diet plans," says Barker, who notes they are low in saturated fat, contain no cholesterol or empty calories, are high in protein and monounsaturated fat, and provide phytochemicals and essential amino acids.

Nonetheless, to continue to drive base growth, retailers will need to increase their merchandising efforts by promoting and prominently displaying a well-rounded assortment of nuts throughout the year. Not only do retailers need to increase the frequency of their promotions, Barker says, they need to make sure large sizes are part of the mix every day as well as during key holiday events when nut purchases tend to be higher. "Retailers need to better display product to minimize out-of-stocks as shelf holding power is limited on promotion," he says. "Approximately 80% of all nuts are bought on impulse, so full-revenue displays work especially well with a tie-in with beverage and produce." Going forward, he predicts future growth in the nut segment will likely be driven by larger sizes, new blends and more healthy-for-you options.

Besides making ingredient changes, snack companies are adding new flavor options to their lineups. Most recently, Kellogg Co. launched Cheez-It BBQ Cheddar Crackers, a flavor that was picked, according to company officials, to tie into the national trend of grilling. "Barbecuing is a national American pastime, and Cheez-It BBQ Cheddar crackers let families enjoy the flavors of grilling all year round," says Michael Allen, senior vice president, Kellogg snacks.

The Cheez-It BBQ Cheddar crackers add to Kellogg's product line of flavors such as Cheez-It Cheddar Jack crackers, Cheez-It White Cheddar crackers, Cheez-It Twisterz in Cheddar & More Cheddar, and Hot Wings & Cheesy Blue.

Bachman Co., based in Reading, Pa., has found that while low-carb is still a consideration for some consumers it seems to be declining in favor of low-fat. "What we see is low trans fat is on the uptick as is the interest in natural, simple ingredients in snacks," notes Bachman president Scott Carpenter. He says this development bodes especially well for national brands. "Consumers are trending toward brands they are familiar with and feel good about, perhaps even grew up with. We are seeing nostalgia influence snack choices, perhaps due to baby boomers' impact."

Carpenter says those factors were taken into consideration when the company launched its Apple Cinnamon Pretzels, which he describes as "an all-natural pretzel with real apple and bursts of cinnamon baked in our brick ovens." How did Bachman come to pick such an unusual flavor? "Consumers are looking for new applications for familiar 'classic' flavorings," says Carpenter. "They want clean, healthful ingredient panels and quality products that deliver on the promise of great taste. Our effort was to make a 'baked-in' flavor without the added oil--less fat--and consistent throughout the entire product, not just at the snack surface."

Peterman from Kettle Foods says while health concerns and unique flavors are certainly influencing what consumers are buying in the snack aisle, that is only part of what is driving them to the shelf. "When it comes to snacks, consumers are not willing to compromise and want it all. They are looking for products with great flavor that meet their overall health goal, even within the snack category," she says. Peterman sees leading restaurant trends folding over into food and snack products. "Consumers' pallets are very sophisticated today and as such they have higher expectations. They are looking for bolder flavors and are willing to experiment with snack choices. For example, whereas teriyaki might have been considered an adventurous snack flavor a year or so ago, today people won't hesitate to try Thai, goat cheese or roasted red pepper flavored snacks. Consumers expect the unexpected."

In terms of merchandising, Peterman says given that natural snacks have very high turns, retailers really benefit when they position natural snacks and other natural foods in hightraffic areas. She notes some retailers feature natural snacks in a store-within-a-store section, but says more recently she is seeing retailers break out a natural section within the snack aisle.

"Some retailers chose to call out natural snacks by changing the flooring; others chose to use graphics and shelf signage consistent with their other natural product programs. It really varies from company to company," she says. Most important, Peterman notes, retailers are advertising and sampling natural snacks, which is helping to keep awareness at its peak. "As a result of this new responsiveness of how food connects to health we'll continue to see natural snacks increase their presence in mainstream grocery stores," she says.
NIBBLES AND NUMBERS

TOTAL U.S. SALES THROUGH FOOD, DRUG AND MASS CHANNELS (EXCLUDING
WAL-MART) FOR 52 WEEKS ENDED OCT. 31.

SALTY SALES CHANGE VS. UNITS
SNACKS (MILLIONS) YEAR AGO SHARE (MILLIONS)

Cheese snacks $529.5 1.2% 7.5% 397.6
Corn snacks (no 387.2 -7.3 5.5 228.1
 tortilla chips)
Other salted 924.2 3.9 13.0 423.5
 snacks (no nuts)
Pork rinds 132.2 13.7 1.9 92.0
Potato chips 2,578.8 1.0 36.4 1,593.8
Pretzels 518.3 -6.5 7.3 298.3
RTE popcorn/ 188.6 -5.2 2.7 126.3
 caramel corn
Tortilla/tostada 1,832.2 0.5 25.8 838.6
 chips
Category total 7,091.0 0.2 3,998.2

SNACK NUTS/ SALES CHANGE VS. UNITS
SEEDS/CORN NUTS (MILLIONS) YEAR AGO SHARE (MILLIONS)

Snack nuts $1,383.5 15.5% 92.2% 479.3
Sunflower/ 109.4 3.7 7.3 93.2
 pumpkin seeds
Toasted corn nut 7.5 7.0 0.5 6.4
 snacks
Category total 1,500.4 14.5 578.8

SALTY CHANGE VS.
SNACKS YEAR AGO SHARE

Cheese snacks -2.7% 9.9%
Corn snacks (no -9.3 5.7
 tortilla chips)
Other salted 0.0 10.6
 snacks (no nuts)
Pork rinds 12.5 2.3
Potato chips 1.0 39.9
Pretzels -8.4 7.5
RTE popcorn/ -4.3 3.2
 caramel corn
Tortilla/tostada -0.2 21.0
 chips
Category total -1.1

SNACK NUTS/ CHANGE VS.
SEEDS/CORN NUTS YEAR AGO SHARE

Snack nuts 15.0% 82.8%
Sunflower/ 2.6 16.1
 pumpkin seeds
Toasted corn nut 4.7 1.1
 snacks
Category total 12.7

Source: Information Resources, Inc.

THE SUPERMARKET SNACK AISLE

TOTAL SALES THROUGH U.S. SUPERMARKETS FOR 52 WEEKS ENDED OCT. 31.

SALTY SALES CHANGE VS. UNITS
SNACKS (MILLIONS) YEAR AGO SHARE (MILLIONS)

Potato chips $2,403.3 0.7% 36.8% 1,468.2
Tortilla/tostada 1,719.9 0.2 26.4 781.1
 chips
Other salted snacks 818.7 3.5 12.6 363.5
 (no nuts)
Pretzels 478.0 -6.6 7.3 273.5
Cheese snacks 477.6 0.7 7.3 359.6
Corn snacks (no 360.6 -7.1 5.5 209.8
 tortilla chips)
Ready-to-eat 143.4 -2.4 2.2 102.0
 popcorn/caramel
 corn
Pork rinds 124.2 12.6 1.9 84.9
Category total 6,525.7 0.0 3,642.5

SALTY CHANGE VS.
SNACKS YEAR AGO SHARE

Potato chips 0.8% 40.3%
Tortilla/tostada -0.3 21.4
 chips
Other salted snacks -1.0 10.0
 (no nuts)
Pretzels -8.6 7.5
Cheese snacks -3.2 9.9
Corn snacks (no -9.2 5.8
 tortilla chips)
Ready-to-eat -3.5 2.8
 popcorn/caramel
 corn
Pork rinds 11.1 2.3
Category total -1.3

Source: Information Resources, Inc.
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Title Annotation:CENTER STORE
Author:Radice, Carol
Publication:Grocery Headquarters
Date:Jan 1, 2005
Words:2302
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